BAMAKO, Feb 16 (Reuters) - Canada's Avnel Gold will suspend production at its loss-making Kalana underground mine in Mali for 18 months from June to expand its operations and build a new processing plant, the West African nation's mines ministry said.
Production will restart in January 2019 at a larger, open-pit mine with estimated gold reserves of 1.96 million ounces.
The Malian state holds a 20 percent stake in the Somika venture, which has operated the Kalana mine since 2003, with the remainder held by Avnel.
The mine has not been profitable for years due to a depletion of its initial reserves and a decline in gold prices, but Avnel kept it open in order to avoiding laying off workers, the company has previously said.
"The company has informed us that it will stop production in June and start construction of a new factory in July which will last a year and a half ... re-starting production in January 2019," said Yaya Djire, head of the ministry's mines division.
The new mine will produce 148,000 ounces of gold a year for the first five years of its 18-year lifespan and will cost 73 billion CFA francs ($117 million), Djire said.
$1 = 622.3400 CFA francs Reporting by Tiemoko Diallo,; Writing by Nellie Peyton, editing by David Evans